# Compromise, Arrangement or Reconstruction of LLP [Sections 60–62]
## (1) Compromise or Arrangement [Sections 60 & 61]
### Step 1: Application to NCLT
Application may be made by:
- LLP, OR
- Creditor, OR
- Partner, OR
- Liquidator
For compromise or arrangement between:
- LLP & its creditors, OR
- LLP & its partners
NCLT may order meeting of creditors/partners to be called, held and conducted.
> Stay Power: NCLT may stay commencement/continuation of any suit or proceeding against the LLP until disposal of the application.
### Step 2: Approval Threshold
Requires approval of:
- Majority in number, AND
- Representing 3/4th in value of creditors/partners present & voting at the meeting
### Step 3: NCLT Sanction
If NCLT sanctions → compromise/arrangement is binding on:
- All creditors
- All partners
- LLP
- Liquidator
- Contributories
> Pre-condition for sanction: NCLT must be satisfied that all material facts of LLP (including latest financial position and any pending investigation) are disclosed.
### Step 4: Filing with ROC
Sanctioned order to be filed by LLP with ROC within 30 days of making such order. Order is effective ONLY after filing.
> Penalty for default in filing: LLP and every DP — ₹10,000 + ₹100 per day continuing default (Max: ₹1 lakh for LLP, ₹50,000 for DP).
### Step 5: Supervision & Failure
NCLT has power to:
- Supervise carrying out of compromise/arrangement
- Give directions or make modifications for proper working
If NCLT is satisfied that the sanctioned scheme cannot be worked satisfactorily — it may order winding up of LLP (suo motu or on application).
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## (2) Reconstruction or Amalgamation [Section 62]
### When Section 62 Applies
Where the Section 60 application proposes:
- Reconstruction of LLP, OR Amalgamation of two or more LLPs, AND
- Undertaking, property or liabilities is to be transferred to another LLP.
### NCLT Order May Provide for:
1. Transfer of undertaking, property or liabilities from transferor LLP to transferee LLP
2. Continuation of legal proceedings pending by/against transferor LLP — to be continued for transferee LLP
3. Dissolution of transferor LLP without winding up
4. Provision for dissenters from the compromise/arrangement
5. Incidental matters necessary for reconstruction/amalgamation
### Filing with ROC
Certified copy of the order to be filed with ROC within 30 days. Same penalty as above for default.
### Critical Conditions
- Property transferred may be free from any charge (if order so provides)
- LLP shall NOT be amalgamated with a Company (only LLP–LLP amalgamation allowed)
- NCLT shall sanction amalgamation ONLY after receiving report from ROC that affairs of LLP are not conducted prejudicial to interest of partners or public
- NCLT shall order dissolution of transferor LLP ONLY after Official Liquidator's report to the same effect